tag:blogger.com,1999:blog-1331441403058020963.post5187880983276322661..comments2024-03-28T06:49:24.930-04:00Comments on International Political Economy at the University of North Carolina: Risky BusinessThomas Oatleyhttp://www.blogger.com/profile/14092437150746625670noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-1331441403058020963.post-10679199120264252372008-09-17T22:21:00.000-04:002008-09-17T22:21:00.000-04:00Questions related to your questions:1. if this cri...Questions related to your questions:<BR/><BR/>1. if this crisis has occurred largely because ratings agencies and investment banks mis-judged risk, then what sort of government control or regulation would have averted the problem? In other words, does anybody trust the government to judge riskiness better than markets?<BR/><BR/>2. If it's true that AIG's trouble isn't insolvency, but rather liquidity, then it's possible that the Fed will make a substantial amount of money on this deal. If that happens, is it good or bad in the long run? <BR/><BR/>3. Derivatives are truly tricky. But the whole point of derivatives is to hedge against risk; not to increase it. now it's true that CDOs of packaged subprime loans did a poor job of that, but haven't most of the rest of derivatives done their job? if so, then maybe we shouldn't throw the baby out with the bathwater? moving forward, it would seem that derivatives can still have an important and valuable role in financial markets.Kindred Winecoffhttps://www.blogger.com/profile/14330671232391851377noreply@blogger.com